British Airways owner IAG agrees new $1.8bn credit facility
British Airways owner IAG took yet another step towards stabilising its finances today by announcing a new $1.8bn (£1.3bn) revolving credit facility.
The new financing arrangement has been agreed with a number of banks and will be available for an initial three years, with the possibility of extension for two more years.
As well as BA, Aer Lingus and Iberia will both be able to access the funding. Each carrier has a separate borrower limit within the whole facility.
Any cash drawn down will be secured against eligible unencumbered aircraft assets and take-off and landing rights at both London Heathrow and London Gatwick airports, IAG said.
Using intangible assets as security against such loans is common practice in the airlines industry.
In conjunction with the new agreement, BA has also cancelled a US credit facility which was due to expire in June with $786m undrawn.
The new deal comes just a week after IAG said it would raise €1.2bn (£1bn) from a new bond sale.
BA itself has agreed its own £2bn loan from a syndicate of banks, partially guaranteed by UK Export Finance (UKEF).
The carrier group has been battered by the coronavirus pandemic, which sent it to a loss of €7bn in 2020 – its worst ever financial performance.
As of the end of March, IAG estimated that it would have €10.3bn in liquidity, comprising €7.8bn in cash, cash equivalents and interest-bearing deposits, €1.7bn undrawn general facilities, including today’s announced facility undrawn, and €800m committed aircraft financing facilities.
Shares in the airline were down 4.4 per cent today, largely on fears that international travel could be banned for longer than initially hoped.